In News
- India’s overall exports are projected to scale new heights, growing at 13.84 percent during FY 2022-23.
Key Highlights
- Goods exports and Trade deficit:
- India’s goods exports declined for the second successive month in March, falling a sharp 13.9% to $38.38 billion while imports dipped 7.9% to $58.11 billion.
- Total goods exports in 2022-23 rose 6.03% to $447.46 billion, while the import bill surged by a steeper 16.5% to $714 billion.
- The goods trade deficit rose almost 40% to over $266 billion in 2022-23, compared to $190 billion in 2021-22.
- India’s goods exports declined for the second successive month in March, falling a sharp 13.9% to $38.38 billion while imports dipped 7.9% to $58.11 billion.
- Oil, electronics lead:
- India’s uptick in outbound shipments was largely led by petroleum, up 27% to $94.5 billion, followed by electronics goods which rose 7.9% to $23.6 billion.
- The other three of India’s top five export items registered insignificant growth – Rice (up 1.5%), chemicals (1%), and drugs and pharmaceuticals (0.8%). Petroleum exports now account for 21.1% of total exports, up from 16% in 2021-22.
- Engineering goods, India’s mainstay in goods exports in recent years, shrank 5.1% to $107 billion, bringing down their share in total exports from $26.6% to 23.9%.
- Russian imports surge
- Fuelled by discounted oil shipments, India’s imports from Russia grew almost 370% to over $46 billion in 2022-23. Russia’s share in imports leaped from 1.6% in 2021-22 to 6.5% last year, making it the fourth largest import source nation for India, behind China, UAE, and the USA.
- China’s share of goods imports dipped to 13.8% in the year gone by from 15.4% in 2021-22.
- Coal, and oil imports up:
- While petroleum imports jumped about 30% to nearly $210 billion in 2022-23, coal imports grew at a faster 57% to touch almost $50 billion.
- Gold imports, on the other hand, fell around 24% to $35 billion as global prices for the metal surged and the Rupee turned weaker.
- Export destinations:
- The USA remained India’s top export destination, followed by UAE, while the Netherlands emerged as the third largest goods buyer, displacing China to the fourth position in 2022-23.
- Netherlands’ share of Indian exports jumped from under 3% in 2021-22 to 4.7%, recording a staggering 66.6% uptick year-on-year.
- Bangladesh and Hong Kong remained in India’s top 10 export markets, although the value of shipments to their shores contracted by 27.8% and 9.9%, respectively.
Government Initiatives to boost exports and reduce trade deficit
- Foreign Trade Policy 2023: The government has launched the Foreign Trade Policy 2023.
- The new policy has replaced the old policy that had been in place since 2015, the new policy kicks in from 2023-24 and aims to almost triple India’s goods and services exports to $2 trillion by 2030, from an estimated $760 billion in 2022-23.
- Interest Equalization Scheme on pre and post-shipment rupee export credit has also been extended up to 31-03-2024.
- Assistance is provided through several schemes to promote exports, namely, Trade Infrastructure for Export Scheme (TIES) and Market Access Initiatives (MAI) Scheme.
- The rebate of State and Central Levies and Taxes (RoSCTL) Scheme to promote labor-oriented textile export has been implemented since 2019.
- The remission of the Duties and Taxes on Exported Products (RoDTEP) scheme has been implemented since 2021.A
- A Common Digital Platform for certificates of Origin has been launched to facilitate trade and increase Free Trade Agreement (FTA) utilization by exporters.
- Champion Services Sectors have been identified for promoting and diversifying services exports by pursuing specific action plans.
- Districts as Export Hubs have been launched by identifying products with export potential in each district, addressing bottlenecks for exporting these products, and supporting local exporters/manufacturers to generate employment in the district.
- The active role of Indian missions abroad in promoting India’s trade, tourism, technology, and investment goals has been enhanced.
- The package was announced in light of the COVID pandemic to support the domestic industry through various banking and financial sector relief measures, especially for MSMEs, which constitute a major share of exports.
Future Outlook
- Slackening external demand amid the global slowdown in the second half of last year, along with the moderation in global commodity prices hurt non-oil exports and these concerns are set to exacerbate this year.
- This could lead to a deeper contraction in merchandise exports in 2023-24, affecting manufacturing output and dragging down GDP growth.
- Moreover, with the Rupee seeing an appreciating tendency, the currency advantage would be weaker for exporters.
- Imports may slow a little due to domestic growth slowing down, but could keep putting pressure on the deficit that could increase if oil prices harden, he cautioned.
Source: TH
